Funds With a Conservative Calling

Cuggino says the reason for choosing off-the-beaten-path assets like precious metals and Swiss bonds is their lack of correlation not only to U.S. equities but to each other. Precious metals and equities generally tend to move independent of each other. And Swiss bonds denominated in francs, for example, act as a hedge on a weakening dollar because the Franc maintains its value better than the U.S. currency, which is often manipulated by the government.

And the fund's effort toward diversification does not stop at selecting diverse asset classes, it also adds an extra measure of safety by mixing assets within those asset classes.

In the aggressive stock portion of the portfolio, for example, the fund holds biotech Amgen(AMGN), Harley-Davidson(HDI), homebuilder Ryland(RYL) and State Street Bank(STT). Not a lot of correlation there, to say the least.

Just how serious is Cuggino about asset allocation? He even spreads out his real estate choices by REIT classification holding residential operator Archstone-Smith(ASN), retail REIT Federal Realty(FRT) and shopping center specialist Equity One(EQY).

The other key to playing it safe, says Cuggino, is the fund's discipline in rebalancing the portfolio if one asset class grows or falls too far.

"Wall Street has a different idea of a balanced fund," says Cuggino. "We never change allocations. That's why we consider ourselves a calm port in stormy waters."

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